We need to stop paying subsidies and invest in our refineries – Sanusi

Governor, Central Bank of Nigeria (CBN), Mallam Sanusi Lamido Sanusi, has warned of grave economic consequences for the nation if Nigerians did not  support the proposed removal of oil subsidy.

He said though the removal  was a painful decision  by the government, it was necessary to secure the future of the country.

The Governor of CBN spoke on Saturday at the 37th convocation ceremony  of the University of Benin (UNIBEN) where he was conferred with a honorary degree of the Doctor of Science (D.Sc.).

Sanusi’s  warning came as President Goodluck Jonathan told mischief makers  within  and outside the universities that while government would not be stampeded into taking hasty decisions, it will also not fold its arms and allow a system that had taken many years to build to crumble overnight.

President Jonathan, who was represented by the Minister of Education, Professor Ruqquayattu Rufa’i, said the “federal government views with serious concern the current threat to security of our country as a result of the activities of some misguided persons and groups. What is more disheartening is that our university system is not left out of this threat.

“We are aware of  bomb blast threats on campuses, but Nigeria’s security agencies are working hard to ensure that there is improved security in the country, and on our campuses as well”.

Meanwhile, Mallam Sanusi said of the proposal to remove oil subsidy, “it does not at all mean government’s lack of sensitivity to the pain it will cause, but the consequence of not taking the decision now will be a Greek-type of economic situation in few years time.

According to Mallam Sanusi, “it is a very difficult time in the world today and economically for policy makers. It is important for every Nigerian to remember that we don’t live in an island.

“We continue to have an economy that remains vunerable to movement of economic goods and prices, we cannot ignore that. European countries are groaning under the weight of sovereign debts. Governments are falling under like a pack of cards.

“The low bond sales of Germany, the strongest economy in Europe, sent a warning signal about the future of the Eurozone.

“India has been under inflation for about one year and high rate has not brought it under control, Brazil is grappling with huge deficit problem; the world faces a risk of double economic recession with the implication for the price of oil, government revenue with the implication for macroeconomic stability”.

“It is important to take to call on academic community to play that role on participating in the extremely difficult and painful economic decision that needs to be taken now in order to avoid disaster in the future”.

“To continue borrowing trillions of Naira and subsidising current consumption is to ask our children to pay for our comfort today. Stable economies are sick.  There are dark clouds on the global horizon. It is easy to take unpalatable economic decision today that may be political in order to secure the future, the Universities have roles to play in ensuring this debate.

“We have to face the fact that we simply cannot continue to live above our means. If we do not take that decision, children are going to have a difficult situation.”

The CBN governor  informed that “we are in a better situation than many countries. Two years ago we took decisions that Europe should have taken. Nigerian banks are the most capitalised banks today. The banks can cope with any shocks and we have taken the decisions that Europe is grappling with, and is still unable to take.

“We have to move beyond financial issue to fiscal issues. It is not enough to fix financial markets, we must look at all areas of risk to the economy.

“We need to have strong voices that will let politicians understand that questions of difficult decision are questions of the future of the Nigerian economy.”

Sanusi challenged academic economists to come out and engage in robust debate, saying “I do not think there is anyone who is ideologically opposed to subsidies. I am an opponent of consumption subsidies.

“Academic economists should come and do an analysis of the benefit and cost. Let us look at how we can minimise the cost and move forward. That is necessary, otherwise we take risk because if there is a global recession in the next three or four years, we will start to blame ourselves for not taking that decision.”

He added that “we have sold over $8bn to oil marketers in the name of importing refined products. The biggest export from the UK to Nigeria is petroleum products. You are creating jobs in Europe. We need to stop paying these subsidies and invest in our refineries. The products are not sold at N65 across Nigeria.

“Let us understand how these regimes work, they are regime of exploitation. There will be difficulty in the short time.

“For a country that is an oil producing country not to have its refinery, a petro-chemical industry, not to convert its gas to power, that is totally unacceptable and you are not going to get investment in that sector.”

6 Comments

1. 

   S N

   November 27, 2011 at 9:26 pm

   First of all, it is not plausible to explain that subsidies are responsible for inefficiency in  our refineries and all other sectors. How many OPEC countries enjoy better subsidies and refine petroleum?

   I’am getting fed up with Sanusi’s macroeconomics and even Nigeria’s “economic fast growth”. The other day the president was asked about the impact of the so called 7.8 GDP growth rate or whatever they call it, on nigerian masses; he said it is for the “big players” in the field.

   Economy is growing, banks are steady, unemployement, insecurity, poverty, hunger, on the rise, Are we really growing or heading towards a bad end? Imagine the richest African is a Nigerian and probably the poorest is also a nigerian. The poverty gap is always in the increase and the leaders are bent on widening it. Is this not spelling doom for us?
   • 

     Rotimi

     November 28, 2011 at 8:38 am

     point of note, poorest Africans are not Nigerians. you need to see some pauperized Sudanese and see the full definition of poverty written all over them.
     • 

       S N

       December 20, 2011 at 2:01 pm

       It seems you do not understand me Rotimi, I presently live in Sudan. I llive in Khartoum and have been to some villages as far as 600kms from Khartoum. I know what I am taking about. There is poverty in Sudan. but the gap betweenthe rich and the poor in Sudan in not comparable to Nigeria. Check UNICEF website and see
   • 

     Eamueo

     November 29, 2011 at 11:26 am

     sanusi na crayce man. na them the susidie go favoure.
2. 

   Glad332002

   November 29, 2011 at 1:48 pm

   Why is Sanusi not thinking good of Nigerians? Why is he interested in suffering the massase, he doesnt have human feelings and he is self centererd in his thinking.He doesnt deserve to Be the CBN governor at all.
3. 

   Glad332002

   November 29, 2011 at 1:54 pm

   Nigerian is a very rich country, inshort one of the richest in africa. Let find a way to make use of our mineral resources and the wealth of the nation to reach the common man. The rich are richer and the poor poorer.
   Now sanusi want to remove subsidy so that the cost of things will be high for the poor ones to suffer, the the rich will be enjoying alone, that is cracy